Employers Eye Telemedicine to Cut Insurance Costs

Healthcare access and delivery seen as last frontier for savings

Having squeezed all they can out of health plan design, employers are now pinning their hopes on telemedicine as the way to bring down their health insurance costs.

Telemedicine is growing rapidly and within a few years will be a routine part of healthcare plans offered by employers, according to the president and CEO of the National Business Group on Health (NBGH), a nonprofit association of 425 large employers.

Brian Marcotte said employers have moved away from issues of plan design, pretty much accepting that there is little chance of improvement there, and are now focusing on how healthcare is accessed and delivered.

Ninety percent of employers will make telemedicine services available to employees in states where it is allowed next year, a sharp increase from 70% this year, according to an annual survey by NBGH.

That figure will rise to virtually 100% by 2020, Marcotte said. He presented the survey findings at the National Press Club in Washington, DC.

The great appeal of telemedicine is that it comes at a lower cost than other care access points, Marcotte said. An emergency visit costs an average $700 per visit, urgent care $150, and a physician office visit $100. A telemedicine session? About $40.

Employers are leveraging the fact that most people have a smartphone with which to access healthcare. That bypasses a pain point both patients and employers loudly complain about, the way a 15-minute talk with a doctor can require nearly a full day off work to travel to the office and wait.

Nowhere Else to Cut

The focus on delivery comes because efficiencies on the front end have been pretty much exhausted. Employers have realized that once you go to a high deductible health plan, there's not much more you can do to save money on the plan design, Marcotte said.

A few tweaks here and there maybe, but nothing that really makes a difference.

"You really have to train your sights on the delivery system if you want to drive efficiencies and control healthcare costs," he said.

In addition to telehealth, employers are focusing on other factors at the point of delivery, Marcotte said. There is more interest in accountable care organizations, high performance networks, and the expansion of centers of excellence beyond transplants and into areas such as bariatric surgery, orthopedics, cancer, and fertility.

The Large Employers' 2017 Health Plan Design Survey is the industry's first look at health benefit costs and plan design changes for 2017. The survey is based on responses from 133 large U.S. employers offering coverage to more than 15 million Americans.

This year's survey finds employers projecting a 6% increase in medical costs for 2017, the same as they would have experienced in the past 2 years had they not made changes to their plan design. Some employers say they might hold increases to 5% by making some changes to their plans.

Medical costs continue to increase at about three times the rate of the Consumer Price Index and twice the rate of general wages, Marcotte said.

"The ongoing, continued, year-over-year trend running around 6% is really unsustainable from a cost perspective and is still the number one issue employers are focused on," Marcotte said. "It really threatens the overall affordability and long term affordability of healthcare."

Marcotte noted, however, that health insurance premiums for the average public exchange plan are increasing by at least 10% for 2017, which he said is a clear indication that the employer-based healthcare model continues to be the most effective way to provide health insurance coverage.

Interestingly, specialty pharmacy costs have emerged as major factor in those increased medical costs. Just 3 years ago, employers didn't even cite pharmacy costs in the top five factors affecting their healthcare expenses, but specialty pharmacy costs are now the number one driver.

Nearly a third of respondents (31%) indicated specialty pharmacy was the highest driver of health costs, compared with only 6% who cited specialty pharmacy as the number one driver in 2014. Overall, 80% of employers placed specialty pharmacy as one of the top three highest cost drivers, followed by high cost claimants (73%) and specific diseases and conditions (61%).

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